WildBrain’s $28m deal to offload TV assets hit by channel carriage dispute with Bell
WildBrain’s properties include the Peanuts franchise
Canadian studio group WildBrain’s deal to offload its linear television channels to IoM Media Ventures has hit a snag stemming from a carriage dispute with Bell.
In December, WildBrain revealed it planned to sell a majority stake in its broadcast television business, consisting of Family Channel, Family Jr, WildBrainTV and Télémagino, to Nova Scotia-based IoM Media Ventures in a deal worth around C$40m (US$28m) over the next four years.
However, following a dispute, WildBrain said it has been unable to negotiate a new carriage agreement with cable provider Bell. Bell now intends to drop the channels from its distribution service altogether, affecting their value considerably.
In a statement issued to investors on Monday evening, WildBrain, which trades on the Toronto Stock Exchange, said it has entered “renegotiations” with IoM “regarding certain commercial aspects of their sale agreement.”
President and CEO Josh Scherba said that losing carriage for the channels via Bell means WildBrain must revise certain aspects of the agreement, but added: “We are optimistic we can arrive at a deal that works for both [WildBrain and IoM].”
In its initial form, the transaction would have seen WildBrain sell 66.6% of the broadcast business and retain 33.3%. Crucially, that would mean it is no longer subject to the Broadcasting Act rule that prevents Canadian broadcasting businesses and assets from being majority owned by non-Canadian companies.
The deal is an important one for the company as it opens up several future deals with international companies, and could position WildBrain – its studio, distribution, consumer products and IP assets – to be sold or merged with a non-Canadian entity in the future.
In the investor update, Scherba said the planned sale of the channels is part of a broader strategy to “simplify and streamline” the business to focus on its key franchises, including Peanuts, Strawberry Shortcake and Teletubbies.
While WildBrain maintained it is confident the IoM deal will eventually go through, Scherba hinted that it is evaluating other options.
“Once we complete the IoM transaction, or exercise alternate options regarding control of the channels, WildBrain will no longer be subject to applicable Canadian control restrictions under the Broadcasting Act,” he said.
Once that is complete, WildBrain said it intends to remove its variable voting structure, which is currently applicable to non-Canadian shareholders, and move to single-class voting system.
WildBrain said it would provide more detail about its long-term strategy and ongoing operations in its upcoming third-quarter earnings report.
